Innovation that matters to you

How the private sector can drive developmental growth

For a company like Philips, innovation isn’t simply defined by the products we create, distribute and constantly adapt to make them even more meaningful and sustainable. Innovation is also at the heart of our business model. And not only so that we can stay one step ahead of our competitors in this digitally-fuelled, increasingly agile world, but so that we can also fulfil our bold mission of directly improving the lives of three billion people a year by 2025.

In emerging economies, like Africa, Asia and South America, a new developmental model is emerging, pioneered by private sector partners like Philips. A business model designed to ensure innovation reaches the right communities whilst allowing countries to own and finance their unique ambitions; communities that may be isolated, economically fragile, and deprived of the basic amenities and infrastructure.

Where lighting is difficult to provide, where expectant mothers can’t get the medical attention they need, where efforts to transform the plight of those living in slums are prohibitively expensive, these are the kinds of communities that rely on companies like Philips to provide and support inclusive growth, in terms of technology, training and after-care.

To achieve such growth, it’s important to be flexible so that the costs and burden of potential deals can be spread out over time to enhance financial possibilities.

And it’s vital that we in the private sector are able to personalize our approach too, so that the solutions we offer are tailored to meet the different socio, economic and political challenges faced by individual nations and even communities. Whether that be loans, leasing, credit, structured financing or pay-per-use.

That’s one of the reasons we at Philips are moving from a business model focused on boxed products to one which envelops far wider needs. And why we are evolving into an integrated solutions provider, collaborating closely with specialized companies, large financial institutions, key governmental stakeholders and NGOs.

For example, an estimated 1.5 million people die every year because of cooking stove fires and lung diseases caused by indoor pollution. With our innovatively designed clean cook stoves, we can reduce that figure enormously. We can also combat harsh living conditions by using solar-powered LED systems to light up rural villages and slums, or provide essential healthcare in renovated clinics with restored electricity.

And there are tangible ways for private enterprise to make such initiatives as profitable as they are meaningful. For instance, an average family in Africa spends around $50 a year on kerosene to light up their homes, or an LED solar lantern costs $20. Many people can’t afford this as a single purchase, so we need to develop business models that enable people – many millions of people – to pay for the lantern differently.

Caring for chronically-ill family members can often plunge people into poverty, or take a significant chunk of their annual budgets, sometimes almost a third. However, technologies such as digital IT platforms and handheld ultrasounds can make healthcare more accessible. In addition, providing facilities that empower people to take preventative measures to protect their health can both save money and help people to live fuller lives.

Recipient governments need to recognize access to healthcare, or electricity and light, as a basic human right and source of economic growth. That will enable more domestic resources to be invested in policies that will directly benefit citizens. Donors need to move away from grants and encourage blending of financial sources, including private sector participation, to reach scale.

Instead of tentative pilot projects, the urgency of societal problems means we need to implement at massive scale, and replicate for impact. The private sector must innovate with and for the most underserved communities, team up with NGOs and develop supply chains and business models which ensure sustainable business and service can be delivered.

In such a way will we be able to meet requirements of individual communities who desperately need innovation but can’t afford it. And we will help those who require expert training and oversight to maximize the efficacy of that technology.

In turn, nations and communities will benefit from long-term partnerships with private sector multi-nationals such as Philips, with a passion and dedication for transforming people’s lives.

Jan-Willem Scheijgrond

Global Head of Government Affairs Business To Government (B2G) Royal Philips

Jan-Willem Scheijgrond heads up a global network responsible for building relationships with governments and related stakeholders. Its primary aim is to address societal challenges with particular focuses in large scale healthcare transformations and energy efficient lighting.